There are No New Rules when it Comes to First Time Home Buyers

There are No New Rules when it Comes to First Time Home Buyers

Like one of my favorite bloggers out there, Bad Money Advice, I don’t really get all these “new” rules that are popping up everywhere.  I don’t believe the “its different” today BS.  I think most of the lists, at best, basically just rehash of old rules that I thought always existed (obviously, minus the past 7 to 9 years) or at worst provide Personal Finance Rules, which shouldn’t be set in stone.

I came across another one of these articles titled, “Seven New Rules for the First-Time Home Buyers” written by Ron Lieber.   Mr. Lieber’s rules aren’t wrong, per se, but I don’t feel like they are groundbreaking or new

  1. Start with the Basics – Put down 20%, Don’t Spend more than 35% of pretax income on mortgage or 45% if we add in stuff like taxes and insurance;
  2. Consider your income – Don’t suffer from income overconfidence where you assume you’ll be making triple your income in 5 years;
  3. Bow to Unknowns – make sure when you are buying realize your life changes (kids, unemployment);
  4. Map out Expenses – to budget is new?
  5. Buy Best – Either buy your dream home or a starter house, but nothing in the middle
  6. Stretch your House
  7. Eight Hour Rule – Sleep on every decision

Like I said, Mr. Lieber’s article isn’t wrong but these rules aren’t knew anyone who didn’t follow them over the past 10 years are probably in foreclosure or will be foreclosure in the upcoming years.

2 Responses to There are No New Rules when it Comes to First Time Home Buyers

  1. Although the tips are recycled, I continue to read them as often as they are published. I’m not planning on buying a house for another 2-3 years, but I always want to have those rules in mind for the big day. However, I wasn’t aware of the “no more than 35% of your pretax income” or the “buy the best” rules. I’ll just add them to my list of things to keep in mind…

  2. I had never heard the best thing either, and I am not even sure I agree with it. I think the 35% is great advice that people rarely follow.

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